The Government is absorbing the financial burden of rising global oil prices through its subsidy system to minimise the impact on the public, Minister of Finance and Public Enterprises Hassan Zareer has said.
The Minister said fuel subsidies account for a significant share of total subsidy expenditure, contributing to a widening budget deficit.
Speaking on the 10th episode of the Ahaa forum, jointly organised by the President’s Office and Public Service Media, Minister Zareer said global oil prices had surged following the conflict that began in the Middle East in March this year.
“The changes in oil prices, logistics and global travel have had a significant impact on us as well. In particular, considerable efforts have been made to keep oil prices stable through the level of subsidies the Government provides and to find solutions to the difficulties the public may face,” the Minister said.
He said the Government had used the subsidy system to shield the public from the impact of rising costs. Against a budget allocation of USD 188 million for subsidies, an additional USD 91 million has been spent, bringing total subsidy expenditure so far this year to USD 279 million.
Despite the challenging circumstances, the Minister said the Government aims to keep the overall budget deficit in single digits as a percentage of GDP, without introducing a supplementary budget, as it did last year.
He added that the Government’s efforts to strengthen the Maldives’ economic and fiscal position had also been recognised by international financial institutions and credit rating agencies.